[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1960 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1960

   To modernize the Public Utility Holding Company Act of 1935, the 
Federal Power Act, the Fair Packaging and Labeling Act, and the Public 
 Utility Regulatory Policies Act of 1978 to promote competition in the 
            electric power industry, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 19, 1997

 Mr. Markey  introduced the following bill; which was referred to the 
                         Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
   To modernize the Public Utility Holding Company Act of 1935, the 
Federal Power Act, the Fair Packaging and Labeling Act, and the Public 
 Utility Regulatory Policies Act of 1978 to promote competition in the 
            electric power industry, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electric Power Competition and 
Consumer Choice Act of 1997''.

SEC. 2. FINDINGS.

    The Congress finds that equitable rates for electric consumers and 
increased efficiency in the use of technology and resources for the 
generation of electric power require--
            (1) increased reliance on competition and market forces 
        rather than traditional rate-of-return regulation of utility 
        monopolies to generate the most efficient, low cost, and 
        reliable electricity for ratepayers;
            (2) access to transmission and distribution facilities for 
        all suppliers and marketers of electricity with pricing and 
        terms and conditions on a comparable basis with those who own 
        or control such facilities;
            (3) a program to promote fuel diversity and conservation 
        and environmental protection through the encouragement of 
        renewable technologies and other environmentally benign 
        generation resources;
            (4) State action to assure that electric utilities may seek 
        to recover only those legitimate, verifiable, and 
        nonmitigatable stranded costs for which there would have been a 
        reasonable expectation of recovery, but for the implementation 
        of retail competition;
            (5) appropriate Federal and State regulation of electric 
        utilities to promote development of a competitive electric 
        generation market and protect consumers against excessive 
        charges by electric utility companies who exercise continued 
        monopoly control over electric power transmission and 
        distribution; and
            (6) reform of certain Federal and State utility regulatory 
        laws and regulations, to promote competition and to prevent 
        anticompetitive behavior by entities with market power, to 
        avoid excessive concentrations of market power, and to prohibit 
        other activities which would undermine a competitive power 
        market.

                   TITLE I--STANDARDS OF COMPETITION

               Subtitle A--Application of PUHCA and PURPA

SEC. 101. PUHCA NOT APPLICABLE IN COMPETITIVE MARKETS.

    The Public Utility Holding Company Act of 1935 (15 U.S.C. 79 and 
following) is amended by redesignating sections 34 and 35 as sections 
35 and 36 respectively and by inserting the following new section after 
section 33:

``SEC. 34. UTILITIES WITH CERTIFICATION OF COMPETITION.

    ``(a) Application of Act to Companies With Certification.--With 
respect to a holding company system, the preceding provisions of this 
Act shall not, except as provided in subsection (b), apply to--
            ``(1) any company in the system, or
            ``(2) any affiliate of such a company,
if each such company and affiliate that is an electric utility company 
has received a certification of compliance with standards and 
requirements of competition under subtitle F of title I of the Public 
Utility Regulatory Policies Act of 1978 from all State regulatory 
authorities which have ratemaking authority over the electric utility 
company.
    ``(b) Withdrawal.--If the certification referred to in subsection 
(a) is withdrawn, unless the certification is reissued within 6 months 
after the date of the withdrawal, effective at the expiration of such 
6-month period, the preceding provisions of this Act shall apply to 
each person referred to in paragraphs (1) and (2) of subsection (a).''.

SEC. 102. PURPA NOT APPLICABLE IN COMPETITIVE MARKETS.

    (a) Application of PURPA.--Title II of the Public Utility 
Regulatory Policies Act of 1978 is amended by adding the following new 
sections at the end thereof:

``SEC. 214. UTILITIES WITH CERTIFICATION OF COMPETITION.

    ``(a) Certain Requirements of Section 210 Suspended.--The 
provisions of section 210 (requiring electric utilities to offer to 
purchase electric energy from qualifying cogeneration facilities and 
qualifying small power production facilities) shall not apply to any 
contracts entered into by that electric utility during any period for 
which a certification of competition from a State regulatory authority 
in accordance with subtitle F of title I is in effect for any electric 
utility.
    ``(b) Protection of Existing Contractual Commitments.--Subsection 
(a) shall not affect any contract or other power purchase arrangement 
between a qualifying cogeneration facility or qualifying small power 
production facilities and an electric utility entered into during any 
period for which a certification referred to in subsection (a) is not 
in effect for such electric utility.
    ``(c) Terms.--For purposes of this section the terms `qualifying 
cogeneration facility' and `qualifying small power production facility' 
shall have the meaning provided for such terms by section 3(17) of the 
Federal Power Act.''.
    (b) Certification of Competition.--Title I of the Public Utility 
Regulatory Policies Act of 1978 is amended by adding the following new 
subtitle at the end thereof:

     ``Subtitle F--Standards of Competition for Electric Utilities

``SEC. 151. CERTIFICATION OF COMPETITION BY STATE REGULATORY 
              AUTHORITIES.

    ``(a) Voluntary State Certification.--A State regulatory authority 
may elect to require any person selling electric energy, or 
distributing electric energy, or both, subject to the jurisdiction of 
such authority to comply with standards and requirements of competition 
under this subtitle. Such election shall be voluntary. Nothing in this 
subtitle prohibits any State regulatory authority from determining that 
it is not appropriate to require any such person to comply with such 
standards and requirements. Nothing in this subtitle prohibits or 
limits any State regulatory authority from implementing any other 
process regarding competition among such persons. Whenever any person 
selling electric energy or distributing electric energy, subject to the 
jurisdiction of a State regulatory authority that has made an election 
under this subsection has complied with standards and requirements of 
competition under this subtitle in accordance with rules established by 
such State regulatory authority, such authority shall issue a State 
certification of compliance to such person.
    ``(b) Criteria for Certification.--After notice and opportunity for 
comment, the Commission shall establish, by rule, criteria for issuance 
by a State regulatory authority of a State certification of compliance 
with standards and requirements for competition under this subtitle. 
Such criteria shall provide that the State regulatory authority which 
has ratemaking authority over a person selling or distributing electric 
energy, or selling and distributing electric energy, may issue such a 
certificate only if such authority determines, after notice and 
opportunity for hearing, that such person meets--
            ``(1) the Federal retail competition standard set forth in 
        section 152(a),
            ``(2) the public benefit certification requirements of 
        section 152(b), and
            ``(3) such other requirements as the Commission prescribes 
        consistent with the public interest and the purposes of this 
        subtitle.
    ``(c) Withdrawal of Certification.--(1) Certification of any person 
under this section shall be withdrawn if the State regulatory authority 
determines, after notice and opportunity for hearing, that such person 
has ceased to meet the standards and requirements of competition under 
this subtitle.
    ``(2) If any person petitions the State regulatory authority with 
ratemaking authority over a person certified under this section to 
withdraw such certification because such certified person has ceased to 
meet the standards and requirements of competition under this subtitle, 
and if such authority fails or refuses to act on such petition within 
180 days after receiving the petition and adequate documentation 
supporting the petition, such petitioner may submit a request to the 
Commission to withdraw the certification of a person under this 
section, and the Commission shall withdraw such certification if the 
Commission determines, after notice and opportunity for hearing, that 
the certified person has ceased to meet the standards and requirements 
of competition under this subtitle.

``SEC. 152. FEDERAL STANDARDS AND REQUIREMENTS OF COMPETITION.

    ``(a) Retail Competition Standard.--A person selling electric 
energy, or distributing electric energy, or both, meets the Federal 
retail competition standard if the following conditions exist:
            ``(1) Unbundled competitive sales.--All retail electric 
        energy services, including retail electric metering and billing 
        services, sold to electric consumers by any person are each 
        sold and billed separately and such sales are open to 
        competition.
            ``(2) Competition for new generating capacity.--The 
        opportunity to build, own, and operate new generating capacity 
        in the State in which such person sells or distributes electric 
        energy is open to competition.
            ``(3) Absence of competitive advantage.--Such person does 
        not gain any undue advantage over other competitors whether by 
        virtue of ownership of a monopoly distribution franchise or its 
        status as a regulated buyer and seller of electricity in a 
        designated service territory or otherwise.
            ``(4) Open access tariffs for distribution.--(A) Except as 
        provided in subparagraph (B), tariffs are in effect for 
        transmission of electric energy through all local distribution 
        facilities owned or controlled by such person and subject to 
        State jurisdiction and such tariffs provide for rates for 
        electric energy transmission that are comparable to the 
        electric energy transmission rates for energy sold by such 
        person.
            ``(B) If the person owning or controlling such local 
        distribution facilities does not sell electric energy 
        transmitted through such facilities, such tariffs must be 
        approved by the State regulatory authority as just, reasonable, 
        and not discriminatory or unduly preferential.
            ``(5) Access to facilities.--If such person owns, operates, 
        or controls local distribution facilities, such person permits 
        reasonable and nondiscriminatory access to such facilities at 
        the locations at which retail electric service is provided and 
        at such other locations as may be necessary to enable other 
        person to provide retail electric energy services, including 
        retail electric metering and billing services, and related 
        information and communications services, on a competitive 
        basis.
    ``(b) Public Benefit Certification Requirements.--A person selling 
electric energy, or distributing electric energy, or both, meets the 
public benefit certification requirements if:
            ``(1) Energy efficiency and renewable energy.--All 
        suppliers of energy services to electric consumers to whom such 
        person provides retail electric energy services in the State 
        have both the incentive and opportunity to provide energy 
        efficiency and renewable energy resources.
            ``(2) Charges.--(A) Except as provided in subparagraph (B), 
        the State has imposed nonbypassable charges on use of, or 
        access to, the electric energy services or facilities of such 
        person that are subject to the jurisdiction of the State. Such 
        charges shall be adequate to ensure sustained and equitable 
        allocation of costs associated with low-income services and 
        other investments, including those in renewable energy 
        resources and energy efficiency, that deliver system wide 
        benefits in the form of equity among, or reduced life-cycle 
        costs of service to, electric consumers served by such services 
        or facilities. Such charges shall include temporary charges 
        necessary to cover the costs of electric utility workforce 
        transition and retraining made necessary by reason of the 
        restructuring of the utility.
            ``(B) In lieu of charges to ensure renewable energy 
        resources and energy efficiency, the State may establish 
        minimum portfolio standards that ensure maintenance or 
        improvement of current levels of reliance on renewable energy 
        resources and energy efficiency.
            ``(3) Recovery of stranded costs; price increases.--Any 
        rules or orders applicable to retail competition among 
        electric-service suppliers protect customers from price 
        discrimination or undue price increases and ensure that if a 
        State approved any recovery of such person's net legitimate, 
        verifiable, nonmitigatable stranded costs for which there would 
        have been a reasonable expectation of recovery, but for the 
        implementation of retail competition, no customer class can 
        avoid paying its equitable share of such costs.
            ``(4) Continued operation of assets.--Under applicable 
        State laws and regulations, any recovery of such stranded costs 
        associated with existing generation assets is not contingent on 
        continued operation of the generation assets for which recovery 
        is approved.
            ``(5) Reliability and consumer protection.--State laws and 
        regulations require all persons seeking to provide retail 
        electric service, or to purchase electric energy for 
        consumption by two or more electric consumers, to have met 
        minimum qualifications to protect the public safety and welfare 
        and ensure the continued reliability of the distribution 
        system.
            ``(6) Aggregation of purchases.--(A) State laws and 
        regulations provide retail electric customers of the person a 
        reasonable opportunity to aggregate their electric energy 
        purchases for the purpose of achieving lower rates.
            ``(B) Such person does not maintain any rule or contractual 
        or operational practice that precludes the aggregation of such 
        purchases.
            ``(7) Net metering for renewable energy.--Such person 
        offers to purchase all electric energy generated at the retail 
        service location by retail electric consumers served by such 
        person if such consumers generate electric energy through the 
        use of generation equipment using renewable energy resources 
        that meets all applicable safety and power quality standards 
        approved by the Commission, and the price for such purchases is 
        based on net energy metering using either dual or single 
        metering and using rates identical in all respects to the 
        standard retail rates applicable to retail sales of electric 
        energy to retail electric customers in the same area served by 
        such persons.

``SEC. 153. COMPARABILITY IN RETAIL ELECTRIC SERVICE.

    ``(a) Federal Comparability Requirement.--It shall be unlawful for 
any person or State or local governmental agency that has a designated 
retail electric energy service territory under State law to provide 
retail electric service, directly or through an affiliate, to any 
person not within such service territory if such service is not 
available on a competitive basis to all retail electric energy 
customers within such service territory. Except for sales to persons 
receiving retail electric service from the Tennessee Valley Authority 
before the enactment of this Act, it shall be unlawful for the 
Tennessee Valley Authority to provide retail electric service to any 
person not within the area referred to in the third sentence of section 
15d(a) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4) 
if such service is not available on a competitive basis to all retail 
electric energy customers within such area. Except for sales to persons 
receiving retail electric service from a Federal Power Marketing 
Authority before the enactment of this Act, it shall be unlawful for 
any Federal Power Marketing Authority to provide retail electric 
service to any person not within the designated power marketing area of 
such agency if such service is not available on a competitive basis to 
all retail electric energy customers within such area.
    ``(b) Enforcement.--Any person may commence a civil action in the 
appropriate United States district court on his or her own behalf 
against any person or State or local government agency or the Tennessee 
Valley Authority or the Secretary of Energy for violation of subsection 
(a). In an action brought under this subsection, the court shall award 
to any substantially prevailing plaintiff the costs of litigation 
including reasonable attorney fees, unless the court finds such award 
to be inappropriate under the circumstances.

``SEC. 154. DEFINITION.

    ``As used in this subpart, the term `renewable energy' means solar 
heat, solar light, wind, geothermal energy, and biomass, except for 
heat from the burning of municipal solid waste.''.
    (c) Consideration and Determination Regarding Retail Competition 
Standards.--(1) Section 111 (d) of the Public Utility Regulatory 
Policies Act of 1978 is amended by adding the following new paragraph 
at the end thereof:
            ``(11) Retail competition standards.--Each electric utility 
        shall meet--
                    ``(A) either the Federal retail competition 
                standard set forth in section 152(a) or the Federal 
                divestiture standard set forth in section 152(b);
                    ``(B) the public benefit certification requirements 
                of section 152(c); and
                    ``(C) such other requirements as the Commission 
                shall prescribe consistent with the public interest and 
                the purposes of subtitle F.''.
    (2) Section 112(b) of such Act is amended by inserting after ``of 
section 111(d)'' in paragraphs (1) and (2) the following ``or after the 
enactment of the Electric Power Competition and Consumer Choice Act of 
1997 in the case of the standards under paragraph (11) of section 
111(d)''.
    (3) Section 112(c) of such Act is amended by inserting ``(or after 
the enactment of the Electric Power Competition and Consumer Choice Act 
of 1997 in the case of the standards under paragraph (11) of section 
111(d))'' after ``enactment of this Act''.
    (4) Section 124 of such Act is amended as follows:
            (A) In the first and second sentences after ``For purposes 
        of'' insert ``any provision of''.
            (B) In the first and second sentences, strike out 
        ``enactment of this Act'' and insert ``enactment of such 
        provision''.

SEC. 103. ADDITIONAL PROVISIONS APPLICABLE TO ELECTRIC UTILITIES AND 
              HOLDING COMPANIES.

    (a) FERC Rules To Prevent Unfair Competitive Advantages.--(1) Part 
II of the Federal Power Act (16 U.S.C. 824 and following) is amended by 
adding the following section after section 214:

``SEC. 215. PREVENTION OF COMPETITIVE ADVANTAGE.

    ``Within 12 months after the enactment of this section, the 
President or his designee shall prescribe rules to assure that persons 
generating or providing electric energy for sale or for ultimate 
consumption cannot obtain any competitive advantage by reason of the 
ownership, control, use, or purchase of electric energy from facilities 
that are not subject to enforceable emission limitations for sulfur 
dioxide, oxides of nitrogen, and carbon dioxide that are as stringent 
as performance requirements for new electric generating facilities 
under the Clean Air Act. Such rule shall assure that total national or 
regional emissions of such pollutants are brought to levels which the 
Administrator of the Environmental Protection Agency certifies are 
sufficient to protect human health and the environment. Such standard 
may provide for trading of emission allowances as a compliance 
option.''.
    (2) Section 201 of such Act is amended as follows:
            (A) By striking ``and 212'' in subsection (b)(2) and 
        inserting ``212, and 215''.
            (B) By striking ``or 211'' in subsection (b)(2) and 
        inserting ``, 211, or 215''.
            (C) By striking ``or 212'' in subsection (e) and inserting 
        ``212, or 115''.
    (b) State and Federal Ratemaking and Other Regulatory 
Authorities.--(1) After the date of enactment of this Act, no provision 
of Federal law shall be construed to preempt otherwise applicable State 
authority to review the prudence of any wholesale or retail cost 
incurred by an electric utility, or to determine the recovery of costs 
for the sale or delivery of electric energy and related services to a 
retail customer regardless of the facilities used for such sales or 
delivery. The preceding sentence shall not apply to any wholesale or 
retail cost incurred by an electric utility the recovery of which in 
wholesale rates has been approved by the Federal Energy Regulatory 
Commission before the enactment of this Act.
    (2) After the date of enactment of this Act, no Federal statute or 
rule shall be construed to affect the authority of the Federal Energy 
Regulatory Commission under the Federal Power Act to approve or 
disapprove the inclusion of existing contract or transaction costs of 
an affiliate or associate company (including costs approved under 
section 13(b) of the Public Utility Holding Company Act) in rates or 
charges imposed by an electric utility if such rates or charges are 
subject to the jurisdiction of the Commission.
    (3) After the date of enactment of this Act, no provision of 
Federal law shall be construed to preempt any State authority to--
            (A) impose nonbypassable charges on use of, or access to, 
        the electric energy services or facilities of any person that 
        are subject to the jurisdiction of the State to ensure 
        sustained and equitable allocation of costs associated with 
low-income services and other investments, including those in fuel 
diversity and energy efficiency, that deliver system wide benefits in 
the form of equity among, or reduced life-cycle costs of service to, 
electric consumers served by such services or facilities; and
            (B) impose minimum portfolio standards that ensure 
        maintenance or improvement of current levels of reliance on 
        renewable energy resources.
Charges referred to in subparagraph (A) include temporary charges to 
cover the costs of electric utility workforce transition and retraining 
made necessary by reason of the restructuring of the utility.
    (4) Section 309 of the Federal Power Act is amended by inserting 
after the second sentence thereof the following: ``The Commission shall 
have the power to establish safety and power quality standards for 
purposes of section 152(b)(7) of the Public Utility Regulatory Policies 
Act of 1978 (relating to net metering for renewable energy).''.
    (c) Energy Service Company Diversification.--Section 9 of the 
Public Utility Holding Company Act of 1935 is amended by adding the 
following new subsection after subsection (c):
    ``(d) The Commission may not use the authority of subsection (c)(3) 
or any other authority of this Act to exempt from prior Commission 
approval under subsection (a)(1) and section 10 the acquisition by a 
registered holding company, or by any subsidiary company thereof, 
directly or indirectly, of any securities, utility assets, or any other 
interest in any energy-related company (as defined by the Commission by 
rule). After the date of the enactment of this subsection, any 
provision of any rule of the Commission that is inconsistent with this 
subsection shall cease to apply.''.
    (d) Investments in Foreign Utility Companies.--Section 9 of the 
Public Utility Holding Company Act of 1935 is amended by adding the 
following new subsection after subsection (d):
    ``(e) The Commission may not permit a registered holding company to 
invest or maintain investments in foreign utility operations in excess 
of 50 percent of consolidated retained earnings (as defined by the 
Commission in part 250.53 of title 17 of the Code of Federal 
Regulations as in effect on April 30, 1997) unless a certification 
under section 151 of the Public Utility Regulatory Policies Act of 1978 
is in effect for such registered holding company.''.

   Subtitle B--Mergers, Acquisition, Market Concentration, Affiliate 
                   relationships and Diversification

SEC. 111. MERGERS AND ACQUISITIONS.

    (a) Prohibition.--A person may not acquire any interest in a public 
utility company that results in ownership of a substantial interest and 
effective control of such company unless--
            (1) the Commission makes the findings set forth in 
        subsection (b); and
            (2) such person has transmitted to the Commission the 
        certifications set forth in subsection (c).
    (b) Required Commission Findings.--The findings referred to in 
subsection (a)(1) are as follows:
            (1) The acquisition described in subsection (a) will not 
        create or maintain a situation inconsistent with effective 
        competition in any market in which competition would benefit 
        consumers.
            (2) Such acquisition will result in substantial cost 
        reductions in the provision of electric energy (in the case of 
        a person acquiring a substantial interest in an electric 
        utility company) or natural gas (in the case of a person 
        acquiring a substantial interest in a gas utility company) that 
        are greater than could be achieved without the acquisition.
            (3) The acquisition will be entered into on an arm's-length 
        basis.
    (c) Public Utility Certification.--The certifications referred to 
in subsection (a)(2) are as follows:
            (1) A certification by the person acquiring the substantial 
        interest, where the merger involves an acquisition premium, 
        that such person will not seek to recover such premium, either 
        directly or indirectly (such as by failing to reduce rates by 
        an amount equal to the full amount by which costs have been 
        reduced as a result of the merger), in rates charged for any 
        service for which there is not effective competition, to the 
        extent such premium exceeds the amount which the Commission has 
        determined to be just and reasonable.
            (2) A certification that each State commission with 
        jurisdiction over the public utility company has certified that 
        it has (A) the authority and resources to prevent the 
        acquisition from having an adverse effect on the rates charged 
        to any retail customer of the public utility (or affiliate), 
        and (B) the authority to prevent the acquisition from taking 
        place.
The Commission shall promulgate regulations concerning the form of 
certification required by this subsection.
    (d) Conditions.--Simultaneously with making the findings under 
subsection (b), the Commission shall establish terms and conditions 
applicable to transactions between a public utility company and the 
person acquiring a substantial interest in such company under 
subsection (a) necessary to ensure the continuing validity of all 
findings made under subsection (b) and certifications made under 
subsection (c).
    (e) Definitions.--For purposes of this section:
            (1) The term ``acquire'' means acquire, merge with, or be a 
        recipient of a merger.
            (2) The term ``substantial interest in a public utility'' 
        means any interest, whether in voting stock, nonvoting stock, 
        securities, partnership share, or any evidence of indebtedness, 
        where the value of the interest equals 10 percent or more of 
        the book value of the public utility.
    (f) Conforming Amendment.--Section 203(b) of the Federal Power Act 
is amended by adding the following at the end thereof: ``Any order of 
the Commission under this section shall require compliance with section 
111 of the Electric Power Competition and Consumer Choice Act of 1977 
in any case in which such section 111 is applicable.''.

SEC. 112. MARKET CONCENTRATION AND AFFILIATE RELATIONSHIPS.

    (a) In General.--A public utility company, or any affiliate 
thereof, may not use its ownership or control of any resource to create 
or maintain a situation inconsistent with effective competition in the 
purchase and sale of electric energy or natural gas in any market in 
which such company (or affiliate) has a designated service territory 
for the retail distribution of electric energy or natural gas.
    (b) Authorized Actions.--Whenever the Commission finds a violation 
of subsection (a), it may order a public utility company, or any 
affiliate thereof, to take any or all of the following actions:
            (1) Sell or otherwise transfer assets to a nonaffiliated 
        company on an arm's-length basis.
            (2) Sell or otherwise transfer assets to an affiliated 
        company, on an arm's-length basis.
            (3) Conduct business activities involving the resource 
        concerned on an arm's-length basis (except in such emergency 
        circumstances as the Commission may authorize by rule).
            (4) Share access to assets on a nondiscriminatory basis at 
        rates which are just and reasonable, and not unduly 
        discriminatory or preferential.

SEC. 113. DIVERSIFICATION.

    (a) In General.--The Commission shall establish regulations which 
ensure each of the following with respect to diversification by any 
public utility company, or affiliate thereof:
            (1) The diversification shall have no adverse impact on 
        electric or natural gas customers of such company.
            (2) There shall be an arm's-length relationship between--
                    (A) the transmission service activities, 
                distribution service activities, and retail sales 
                activities of the public utility company or affiliate; 
                and
                    (B) any other business activities of the public 
                utility company or any affiliate thereof.
        The Commission may, by rule, provide for an exemption from the 
        arm's-length relationship requirements of this paragraph for 
        emergency circumstances.
            (3) The Commission and each State commission having 
        authority over retail sales of electric energy or natural gas 
        by such company have such access to books and records of the 
public utility company and all affiliates thereof as is necessary to 
ensure that the foregoing conditions are met and continue to be met.
The Commission shall not permit any diversification referred to in this 
subsection unless each State commission that has ratemaking authority 
over such company or any affiliate thereof has certified to the 
Commission that it has the authority and resources to prevent such 
diversification from having an adverse effect on retail customers of 
such public utility company or any affiliate thereof.
    (b) Contracts With Affiliates.--No contract entered into after the 
date of the enactment of this Act between any public utility company 
and an affiliate having a total value of $1,000,000 or more, shall be 
valid unless each State commission having authority over retail sales 
of electric energy or natural gas by such company or affiliate has 
found that--
            (1) such contract will have no adverse effect on consumers; 
        and
            (2) such State commission has the authority and resources 
        to prevent any such adverse effect.
    (c) Costs and Revenues.--No Federal law shall be interpreted to 
prevent a State commission or the Commission, when establishing rates 
for any type of electric service or natural gas subject to the 
jurisdiction of such State commission or the Commission, from 
disallowing any costs unreasonably incurred, or imputing any revenues 
unreasonably foregone, including costs incurred or revenues foregone as 
a result of an interaffiliate transaction. The previous sentence shall 
not apply to any cost incurred and recovered in rates or charges or 
revenues foregone prior to July 11, 1996, whether or not subject to 
refund or adjustment.
    (d) Amendment of Section 318.--Section 318 of the Federal Power Act 
is amended as follows:
            (1) By striking ``shall apply to such person'' and 
        inserting ``shall not apply to such person''.
            (2) By striking ``not be subject to the requirement of this 
        Act, or of'' and inserting ``be subject to the requirement of 
        this Act and of''.
            (3) By striking ``, unless the Securities'' and all that 
        follows down to the period at the end thereof.

SEC. 114. ENFORCEMENT.

    Section 314 of the Federal Power Act is amended by inserting ``or 
subtitle B of title I of the Electric Power Competition and Consumer 
Choice Act of 1997'' after ``this Act'' in each place it appears in 
subsections (a) and (b).

SEC. 115. ANTITRUST LAWS NOT AFFECTED.

    Nothing in this Act shall be construed to modify or supersede the 
application of the antitrust laws to any activity to which the 
provisions of this Act apply or to any public utility company, electric 
utility, or to any other person or entity to whom the provisions of 
this Act apply. As used in this section the term ``antitrust laws''--
            (1) has the meaning given it in subsection (a) of the first 
        section of the Clayton Act (15 U.S.C. 12(a)), except that such 
        term includes section 5 of the Federal Trade Commission Act (15 
        U.S.C. 45) to the extent such section 5 applies to unfair 
        methods of competition; and
            (2) includes any State law similar to the laws referred to 
        in paragraph (1).

   Subtitle C--Electric Energy Transmission and Distribution Policies

SEC. 121. TRANSMISSION ACCESS AND FACILITATION OF RETAIL COMPETITION.

    (a) Transmission Access.--Section 211 of the Federal Power Act is 
amended by adding the following at the end thereof:
    ``(f) Transmission Access.--Within 12 months after the date of 
enactment of this subsection, the Commission shall promulgate rules to 
establish tariffs applicable in the largest region or regions feasible 
to carry out each of the following:
            ``(1) Ensure development and efficient operation of 
        competitive electricity markets, while encouraging the 
        economical and efficient use of existing generating facilities, 
        and the economical location and use of future generating 
        facilities.
            ``(2) Ensure the full recovery by owners of transmission 
        facilities of all prudent transmission costs.
            ``(3) Prevent multiple charges for transmission service 
        based on the number of transmission owners.
            ``(4) Prevent any person engaged in the sale of energy from 
        gaining any advantage over competitors by reason of such 
        person's ownership or control of electric power transmission or 
        distribution facilities.''.
    (b) Facilitation of Retail Competition.--Section 212(h) of such Act 
is amended to read as follows:
    ``(h) Orders To Facilitate Retail Competition.--Notwithstanding any 
other provision of law, any order under this Act requiring a 
transmitting utility to provide wholesale transmission service shall 
also apply to retail transmission service provided by such utility or 
any other electric utility to the extent necessary to permit 
the provision of retail competition in accordance with subtitle F of 
title I of the Public Utility Regulatory Policies Act of 1978.''.

SEC. 122. APPLICATION OF FERC OPEN ACCESS RULES TO NONJURISDICTIONAL 
              UTILITIES.

    Effective on the date one year after the date of enactment of this 
Act, all rules adopted by the Commission under section 201, 205, or 206 
of the Federal Power Act that are applicable to wholesale or retail 
open access transmission services of public utilities shall apply to 
any such services provided by any transmitting utility (as defined in 
section 3(23) of such Act) that is not a public utility (as defined in 
section 201(e) of such Act) and to any Federal Power Marketing Agency 
in the same manner and to the same extent as such rules apply to public 
utilities (as so defined), except that the Commission may exempt any 
such transmitting utility from such rules, or modify the application of 
such rules to any such transmitting utility if the Commission finds 
that such action is in the public interest.

SEC. 123. ACCESS TO BOOKS AND RECORDS.

    (a) State Commissions.--Section 201(g)(1) of the Federal Power Act 
is amended by adding the following at the end thereof: ``A public 
utility, and each affiliate or associate thereof, shall produce for 
examination such personnel, books, accounts, memoranda, contracts, 
records, and any other materials upon an order of any State commission 
finding that production of such materials will assist the State 
commission in carrying out its responsibilities. The cost of any audit 
ordered by a State commission under either this section or under State 
law, shall be borne by the public utility and its affiliates.''.
    (b) FERC.--Section 301 is amended by adding the following at the 
end thereof:
    ``(d) A public utility, and each affiliate or associate thereof, 
shall produce for examination such personnel, books, accounts, 
memoranda, contracts, records, and any other materials upon an order of 
the Commission finding that production of such materials will assist 
the Commission in carrying out its responsibilities. The cost of any 
audit ordered by the Commission under this section, shall be borne by 
the public utility and its affiliates.''.

SEC. 124. ADDITIONAL AMENDMENTS TO PURPA.

    Title II of the Public Utility Regulatory Policies Act of 1978 is 
amended by adding the following after section 215:

``SEC. 216. ENCOURAGEMENT OF PARTICULAR GENERATION TECHNOLOGIES.

    ``Nothing in this Act, the Federal Power Act, or any other 
provision of Federal law prevents a State regulatory authority, in 
making a determination for purposes of section 210 of the incremental 
cost to a purchasing electric utility of alternative electric energy, 
from establishing such incremental costs at levels which reflect 
avoided environmental costs that are not included in market rates. 
Where a State regulatory authority determines that an electric 
utility's incremental cost of alternative electric energy shall be 
determined by competitive bidding, the State regulatory authority may 
segment the bid by generation technology or by groups of generation 
technologies.''.

SEC. 125. CONSUMER INFORMATION.

    The Fair Packaging and Labeling Act (15 U.S.C. 1451 and following) 
is amended by inserting the following new sections after section 12:

``SEC. 13. CONSUMER INFORMATION DISCLOSURE.

    ``(a) Disclosure Rules.--Not later than January 1, 1999, the 
Federal Trade Commission, in consultation with the Administrator of the 
Environmental Protection Agency and the Secretary of Energy, shall 
issue rules prescribing the time, form, content, and frequency of 
supplier disclosure as required under subsections (b) and (c) of this 
section.
    ``(b) Disclosure to Electric Consumers.--In order to assist 
electric consumers in making informed purchasing decisions, each person 
that sells or offers to sell electric energy to electric consumers in a 
State that has adopted the retail competition standard under subtitle 
F, shall provide to the electric consumer the following information in 
accordance with rules under subsection (a):
            ``(1) Historic and projected generating source data.
            ``(2) Historic and projected air and water emissions data.
            ``(3) The following price information:
                    ``(A) The price of electric energy expressed in 
                terms of the charge per billing unit.
                    ``(B) The definition of the billing unit.
                    ``(C) A description of any variable charges and a 
                statement identifying the factors that would cause the 
                charge per billing unit to vary. The supplier shall 
                provide support for any representation made regarding 
                the likelihood or frequency of changes in the charge 
                per billing unit.
                    ``(D) A description of all other charges or costs 
                that are associated with the service being offered 
                including, but not limited to, access charges, exit 
                charges, back-up service charges, stranded benefits, 
                and stranded cost recovery charges and customer service 
                charges.
            ``(4) Historic and projected reliability data.
            ``(5) A notice of any orders or other legal actions pending 
        against such person for noncompliance with Federal, State, and 
        local environmental and nuclear safety laws.
    ``(c) Generating Source Information Wholesale Transactions.--In 
every contract for the sale of electric energy for resale, the seller 
of electric energy shall provide to the purchaser of such generation 
source data and emissions data as may be required by rules under 
subsection (a).
    ``(d) Authority To Obtain Books and Records.--The Federal Trade 
Commission may use the authority of sections 3, 6, 9, and 20 of the 
Federal Trade Commission Act (15 U.S.C. 41 and following) to obtain any 
information necessary to carry out its duties under this section, 
without regard to the limitations contained in section 21(b) (15 U.S.C. 
57b-2(b)).
    ``(e) Exempt Information.--The Commission may, by rule, exempt from 
subsection (b) any information that the Commission determines is not 
technologically or economically feasible to provide or that is not 
likely to assist consumers in purchasing decisions.
    ``(f) Prohibited Acts and Enforcement.--(1) It shall be unlawful 
for any person to fail to provide any of the information required by 
this section or under the rules issued under subsection (a).
    ``(2) Any person who fails to provide information required under 
the rules issued under subsection (a) of this section or who provides 
false or misleading information under subsection (a) of this section 
shall be subject to a civil penalty of not more than $1,000,000 for 
each violation.
    ``(3) Any person against whom a civil penalty is assessed under 
paragraph (2), above may, within 60 calendar days after the date of the 
order of the Commission assessing such penalty, institute an action in 
the United States Court of Appeals for the appropriate judicial circuit 
for judicial review of such order in accordance with chapter 7 of title 
5, United States Code (5 U.S.C. 701 et seq.). The court shall have 
jurisdiction to enter a judgment affirming, modifying, or setting aside 
in whole or in part, the order of the Commission, or the court may 
remand the proceeding to the Commission for such further action as the 
court may direct.
    ``(4) Any violation of a rule under this section shall be treated 
as a violation of a rule respecting unfair or deceptive acts or 
practices in or affecting commerce (within the meaning of section 
5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) and as 
a violation of section 18 of such Act (15 U.S.C. 57a).
    ``(g) State Authority.--A State regulatory authority may prescribe 
disclosure requirements in addition to those provided under this 
section.
    ``(h) Enforcement by States.--
            ``(1) In general.--Whenever an attorney general of any 
        State has reason to believe that the interests of the residents 
        of that State have been or are being threatened or adversely 
        affected because any person is violating or has violated any 
        rule of the Commission under this section, the State, as parens 
        patriae, may bring a civil action on behalf of its residents in 
        an appropriate district court of the United States to enjoin 
such violating, to enforce compliance with such rule of the Commission, 
to obtain damages, restitution, or other compensation on behalf of 
residents of such State, or to obtain such further and other relief as 
the court may deem appropriate.
            ``(2) Notice.--The State shall serve prior written notice 
        of any civil action under this subsection upon the Commission 
        and provide the Commission with a copy of its complaint, except 
        that if it is not feasible for the State to provide such prior 
        notice, the State shall serve such notice immediately upon 
        instituting such action. Upon receiving a notice respecting a 
        civil action, the Commission shall have the right (A) to 
        intervene in such action, (B) upon so intervening, to be heard 
        on all matters arising therein, and (C) to file petitions for 
        appeal.
            ``(3) Construction.--For purposes of bringing any civil 
        action under this subsection, nothing in this section shall 
        prevent an attorney general from exercising the powers 
        conferred on the attorney general by the laws of such State to 
        conduct investigations or to administer oaths or affirmations 
        or to compel the attendance of witnesses or the production of 
        documentary and other evidence.
            ``(4) Actions by commission.--Whenever a civil action has 
        been instituted by or on behalf of the Commission for violation 
        of any rule under this section, no State may, during the 
        pendency of such action instituted by or on behalf of the 
        Commission, institute a civil action under this subsection 
        against any defendant named in the complaint in such action for 
        violation of any rule as alleged in such complaint.
            ``(5) Venue; service of process.--Any civil action brought 
        under this subsection in a district court of the United States 
        may be brought in the district in which the defendant is found, 
        is an inhabitant, or transacts business or wherever venue is 
        proper under section 1391 of title 28. Process in such an 
        action may be served in any district in which the defendant is 
        an inhabitant or in which the defendant may be found.
            ``(6) Actions by other state officials.--(A) Nothing 
        contained in this section shall prohibit an authorized State 
        official from proceeding in State court on the basis of an 
        alleged violation of any civil or criminal statute of such 
        State.
            ``(B) In addition to actions brought by an attorney general 
        of a State under this subsection, such an action may be brought 
        by officers of such State who are authorized by the State to 
        bring actions in such State on behalf of its residents.
    ``(i) Definitions.--For purposes of this section:
            ``(1) Generation source data.--The term `generation source 
        data' for a sale of electric energy means the fuel or source of 
        energy for the facility or facilities generating the electric 
        energy, calculated in such manner as the Commission, in 
        consultation with the Secretary shall, prescribe by rule.
            ``(2) Emissions data.--The term `emissions data' for a sale 
        of electric energy means the emissions of criteria air 
        pollutants, carbon dioxide, and any other air or water 
        pollutant specified by the Commission, in consultation with the 
        Administrator and the Secretary, by rule associated with a 
        facility or facilities generating such energy calculated in 
        such manner as the Administrator, in consultation with the 
        Secretary, may prescribe by rule.
            ``(3) Criteria air pollutant.--The term `criteria air 
        pollutant' means an air pollutant for which an ambient air 
        quality standard has been prescribed under section 109 of the 
        Clean Air Act.

``SEC. 14. PRIVACY OF CONSUMER PROPRIETARY INFORMATION.

    ``(a) Privacy Requirements.--Except as required by law or with the 
prior written affirmative approval of the consumer, any person that 
receives or obtains customer information by virtue of its provision of 
a retail electric service or metering and billing service shall only 
use, disclose, or permit access to individually identifiable consumer 
information in its provision of (1) a retail electric service or 
metering and billing service from which such information is derived, or 
(2) services necessary to, or used in, the provision of such service.
    ``(b) Disclosure on Request by Consumers.--An electric utility or 
metering and billing service provider shall disclose consumer 
information, upon affirmative written request by the consumer, to any 
person designated by the consumer.
    ``(c) Aggregate Consumer Information.--Any person that receives or 
obtains consumer information by virtue of its provision of retail 
electric service or metering and billing services may use, disclose, or 
permit access to aggregate consumer information other than for the 
purposes described in subsection (a). An electric utility or metering 
or billing service provider may use, disclose, or permit access to 
aggregate consumer information other than for purposes described in 
subsection (a) only if it provides such aggregate information to other 
retail electric service providers on reasonable and nondiscriminatory 
terms and conditions upon reasonable request therefor.
    ``(d) Exceptions.--Nothing in this section prohibits an electric 
utility or metering and billing service provider from using, 
disclosing, or permitting access to consumer information obtained from 
its consumers, either directly or indirectly through its agents--
            ``(1) to initiate, render, bill, and collect for retail 
        electric services or metering and billing services;
            ``(2) to protect the rights or property of the electric 
        utility or metering and billing service provider, or to protect 
        consumers of those services and other service providers from 
        fraudulent, abusive, unlawful use of, or subscription to such 
        services; or
            ``(3) for purposes of compliance with any other Federal or 
        State law or regulation authorizing disclosure of information 
        to a Federal or State agency.
    ``(e) Definitions.--As used in this section:
            ``(1) Consumer information.--The term `consumer 
        information' means--
                    ``(A) information that relates to the quantity, 
                technical configuration, type, destination, and amount 
                of use of a retail electric service subscribed to by 
                any consumer, and that is made available to an electric 
                utility or metering and billing service provider solely 
                by virtue of its business relationship; and
                    ``(B) information contained in the bills pertaining 
                to retail electric service received by a consumer.
            ``(2) Aggregate consumer information.--The term `aggregate 
        consumer information' means collective data that relates to a 
        group or category of services or consumers, from which 
        individual consumer identities and characteristics have been 
removed.''.

SEC. 126. FEDERAL RENEWABLES POLICY.

    (a) Minimum Renewable Generation Requirement.--Every person who 
generates, and sells to any other person, electric energy shall submit 
to the Secretary of Energy renewable energy credits (computed in 
kilowatt-hours) in an amount equal to a specified percentage of its 
total of such sales in the preceding calendar year. The specified 
percentage shall be 3 percent for calendar year 1998. The Secretary 
shall annually establish a gradually increasing specified percentage 
for each calendar year after calendar year 1998 according to a sliding 
scale such that the specified percentage for the calendar year 2010 and 
thereafter is 10 percent. Nothing in this section shall be construed to 
prohibit any State from requiring additional renewable energy 
generation in that State under any program adopted by the State.
    (b) Submission of Credits.--A person generating electric energy may 
satisfy the requirements of subsection (a) through the submission of--
            (1) renewable energy credits issued by the Secretary of 
        Energy under this section for renewable energy generated by 
        such person in such calendar year;
            (2) renewable energy credits issued by the Secretary of 
        Energy under this section to any other person for renewable 
        energy generated in such calendar year by such other person and 
        acquired by such person; and
            (3) any combination of the foregoing.
    (c) Issuance of Renewable Energy Credits.--
            (1) In general.--The Secretary of Energy shall establish, 
        by rule after notice and opportunity for hearing but not later 
        than 120 days after the enactment of this Act, a program to 
        issue renewable energy credits to generators of renewable 
        energy. Renewable energy credits shall be identified by type of 
        generation and facility location (State). Under such program, 
        the Secretary of Energy shall issue one renewable energy credit 
        to any person who generates in any State one unit of electric 
        energy through the use of renewable energy.
            (2) Fees.--The Secretary of Energy shall impose and collect 
        a fee on recipients of renewable energy credits in an amount 
        equal to the administrative costs of issuing, recording, 
        monitoring the sale or exchange, and tracking of such credits. 
        The failure or refusal of any person to pay such fee shall be 
        subject to a civil penalty equal to 2\1/2\ times the amount of 
        the unpaid fees. The Secretary of Energy shall bring an action 
        in the appropriate United States district court to collect any 
        unpaid fees and to impose a civil penalty on any person who 
        fails or refuses to pay such fee imposed under this section.
            (3) PURPA contracts.--To the extent purchases are made by 
        an electric utility from a generator pursuant to section 210 of 
        the Public Utility Regulatory Policies Act of 1978, the 
        electric utility shall be treated for purposes of this section 
        as the generator of such energy unless such generator and 
        utility agree to terminate such contract prior to the 
        expiration date set forth in the contract.
    (d) Sale or Exchange.--Renewable energy credits may be sold or 
exchanged by the person to whom issued or by any other person who 
acquires the credit. A renewable energy credit for any year that is not 
used to satisfy the minimum renewable generation requirement of 
subsection (a) for that year may not be carried forward for use in 
another year. The Secretary of Energy shall promulgate regulations to 
provide for the issuance, recording, monitoring the sale or exchange, 
and tracking of such credits and ensuring public disclosure of price 
information. The Secretary of Energy shall maintain records of all 
sales and exchanges of credits. No such sale or exchange shall be valid 
unless recorded by the Secretary of Energy.
    (e) Enforcement.--The Secretary of Energy shall bring an action in 
the appropriate United States district court to impose a civil penalty 
on any person who fails or refuses to comply with subsection (a). The 
failure or refusal of any person to submit any required quantity of 
renewable energy credits shall be subject to a civil penalty of not 
more than 2\1/2\ times the estimated national average market value (as 
determined by the Secretary of Energy) for the calendar year concerned 
of such quantity of renewable energy credits.
    (f) Rules.--The Secretary of Energy shall promulgate such rules as 
may be necessary to carry out this section, including such rules 
requiring the submission of such information as may be necessary to 
verify the annual electric energy generation and renewable energy 
generation of any person applying for renewable energy credits under 
this section or to verify and audit the validity of renewable energy 
credits submitted by any person to the Secretary of Energy.

SEC. 127. UNIVERSAL SERVICE.

    (a) Procedures To Review Universal Service Requirements.--
            (1) Federal-state joint board on universal service.--Within 
        one month after the date of enactment of the this Act, the 
        Commission shall establish a Federal-State Joint Board and 
        institute and refer to the Joint Board a proceeding to 
        recommend uniform universal service support mechanisms.
            (2) State action.--In order to support the public benefit 
        certification requirements of section 152(b), each State shall 
        consider the recommendations from the Joint Board required by 
        paragraph (1) prior to making the certification of competition 
        under subtitle F of the Public Utility Regulatory Polcies Act 
        of 1978. Thereafter, the States should complete any proceeding 
        to implement subsequent recommendations from any Joint Board on 
        universal service within one year after receiving such 
        recommendations.
    (b) Universal Service Principles.--The Joint Board and the States 
should base policies for the preservation and advancement of universal 
service on the following principles:
            (1) Quality and rates.--Quality services should be 
        available at just, reasonable, and affordable rates.
            (2) Access to advanced services.--Access to advanced 
        electric services should be provided in all regions of the 
        Nation.
            (3) Access in rural and high cost areas.--Consumers in all 
        regions of the Nation, including low-income consumers and those 
        in rural, insular, and high cost areas, should have access to 
        electric services, including advanced services, that are 
        reasonably comparable to those services provided in urban areas 
        within the same region and that are available at rates that are 
        reasonably comparable to rates charged for similar services in 
        such urban areas. Nothing in this paragraph shall result in any 
        preference for centralized generation or for the extension of 
        existing retail distribution facilities.
            (4) Equitable and nondiscriminatory contributions.--All 
        providers of electric services should make an equitable and 
        nondiscriminatory contribution to the preservation and 
        advancement of universal service.
            (5) Specific and predictable support mechanisms.--There 
        should be specific, predictable and sufficient mechanisms to 
        preserve and advance universal service.
            (6) Additional principles.--Such other principles as the 
        Joint Board and the States determine are necessary and 
        appropriate for the protection of the public interest, 
        convenience, and necessity and are consistent with this Act.
    (c) Definition.--
            (1) In general.--Universal service is an evolving level of 
        electric services that the States shall establish periodically 
        under this section, taking into account advances in 
        technologies and services. The Joint Board in recommending, and 
        the States in establishing, the definition of the services that 
        are supported by universal service support mechanisms shall 
        consider the extent to which such services--
                    (A) are essential to public health or public 
                safety;
                    (B) have, through the operation of market choices 
                by customers, been subscribed to by a substantial 
                majority of residential customers;
                    (C) are being deployed in transmission and 
                distribution systems by electric service providers; and
                    (D) are consistent with the public interest, 
                convenience, and necessity.
            (2) Alterations and modifications.--The Joint Board may, 
        from time to time, recommend to the States modifications in the 
        definition of the services that are supported by universal 
        service support mechanisms.
    (d) Utility Contribution.--Every electric utility that provides 
interstate electric services shall contribute, on an equitable and 
nondiscriminatory basis, to the specific, predictable, and sufficient 
mechanisms established by the States to preserve and advance universal 
service. Any State may exempt a utility or class of utilities from any 
requirement established by the State consistent with this subsection if 
the utility's activities are limited to such an extent that the level 
of such utility's contribution to the preservation and advancement of 
universal service would be de minimis. Any other provider of electric 
services may be required to contribute to the preservation and 
advancement of universal service if the public interest so requires.
    (e) State Authority.--A State may adopt regulations to preserve and 
advance universal service. Every electric utility that provides 
intrastate electric services shall contribute, on an equitable and 
nondiscriminatory basis, in a manner determined by the State to the 
preservation and advancement of universal service in that State. A 
State may adopt regulations to provide for additional definitions and 
standards to preserve and advance universal service within that State.
    (f) Consumer Protection.--The States should ensure that universal 
service is available at rates that are just, reasonable, and 
affordable.
    (g) Subsidy of Competitive Services Prohibited.--An electric 
utility may not use services that are not competitive to subsidize 
services that are subject to competition. The States shall establish 
any necessary cost allocation rules, accounting safeguards, and 
guidelines to ensure that services included in the definition of 
universal service bear no more than a reasonable share of the joint and 
common costs of facilities used to provide those services.

            Subtitle D--General and Miscellaneous Provisions

SEC. 131. DEFINITIONS.

    As used in this title:
            (1) The term ``Commission'' means the Federal Energy 
        Regulatory Commission, except as otherwise specifically 
        provided.
            (2) The term ``public utility'' has the meaning provided by 
        section 201(e) of the Federal Power Act.
            (3) Except as otherwise specifically provided in this Act, 
        the term ``affiliate'' means a person that (directly or 
        indirectly) owns or controls, is owned or controlled by, or is 
        under common ownership or control with, another person. For 
        purposes of this paragraph, the term ``own'' means to own an 
        equity interest (or the equivalent thereof) of more than 10 
        percent.
            (4) The term ``arm's-length relationship'' means a 
        relationship between--
                    (A) those business activities conducted by a public 
                utility for its transmission service customers, 
                distribution service customers, or retail electric 
                customers; and
                    (B) any other business activities conducted by the 
                same corporation or any affiliate or associate company, 
                where--
                            (i) such business activities are conducted 
                        in compliance with Commission rules ensuring 
                        that--
                                    (I) no business activity has any 
                                advantage over its competitors due to 
                                its affiliation with a business which 
                                serves transmission service customers, 
                                distribution service customers, or 
                                retail electric customers who do not 
                                have the right to choose their own 
                                electric supplier; and
                                    (II) no transmission service 
                                customer, distribution service customer 
                                or retail electric customer who do not 
                                have the right to choose his own 
                                electric supplier is disadvantaged due 
                                to its affiliation with a competitive 
                                enterprise; and
                            (ii) the public utility has certified that 
                        with respect to any resource (whether tangible 
                        or intangible) owned, or employees employed, by 
                        a public utility which is an affiliate or 
                        associate of such person, any cost of which has 
                        been recovered from the captive customers of 
                        such public utility (or, in the case of a 
                        registered holding company, from the captive 
                        customers of a public utility which is an 
                        affiliate or associate of such public utility), 
                        no use of such resources or employees shall be 
                        made by such public utility or any affiliate or 
                        associate thereof for any purpose other than 
                        serving such native load customers, nor shall 
such resources or employees be sold or transferred to any affiliate or 
associate therefore, unless such public utility remits to such captive 
customers, through a procedure found satisfactory by each affected 
State commission responsible for setting the rates for such customers, 
the higher of the cost attributable to such use or the market value of 
such use.
            (5) The term ``diversification'' refers to the conduct of 
        any business activity other than the generation, transmission, 
        distribution or sale of electric energy.
            (6) The term ``economic risk'' includes the risk, in any 
        form, that the cost of a resource borne by the consumer at any 
        time in the life of the resource will be below the market value 
        of the resource.
            (7) The term ``effective competition'' refers to a market 
        in which no profit-maximizing seller could profitably impose a 
        significant and nontransitory increase in price, as determined 
        by the Commission. In determining whether an action is 
        inconsistent with effective competition, the Commission shall 
        take into account the size of market share and the extent of 
        any barriers to entry. For purposes of this paragraph, behavior 
        which is mandated by State law is not inconsistent with 
        effective competition.
            (8) The term ``captive customers'' means the group of 
        customers of a pubic utility who do not have the right to 
        choose their own supplier of electricity.
            (9) The terms ``public utility company'', ``electric 
        utility company'' and ``gas utility company`` have the meanings 
        provided by section 2(a) of the Public Utility Holding Company 
        Act of 1935.
            (10) The term ``renewable energy'' means solar heat, solar 
        light, wind, geothermal energy, and biomass, except for heat 
        from the burning of municipal solid waste.

                         TITLE II--RELIABILITY

SEC. 201. ELECTRIC RELIABILITY COUNCILS.

    (a) In General.--Part II of the Federal Power Act is amended by 
adding after section 216 the following new section:

``SEC. 217. ELECTRIC RELIABILITY COUNCILS.

    ``(a) Definitions.--As used in this section:
            ``(1) The term `electric reliability council' means a self-
        regulated organization whose membership is composed of electric 
        utilities or transmitting utilities and whose mission to 
        promote the reliability of electricity supply and system.
            ``(2) The term `electric reliability system' means the 
        network of transmission lines and generating units in a given 
        geographic area, operated collaboratively by or for their 
        owners, in a manner that promotes the reliability of bulk 
        electric systems.
    ``(b) Membership.--(1) Each electric utility and transmitting 
utility shall become a member of an electric reliability council.
    ``(2) An electric reliability council may condition membership on 
meeting standards of operation that the council establishes, and may 
bar from or suspend the membership of an electric utility or 
transmitting utility that fails to comply with a condition placed on 
its membership.
    ``(c) Rules.--An electric reliability council shall establish rules 
that--
            ``(1) permit open access to membership;
            ``(2) assure fair representation of its members in the 
        selection of it directors and management of its affairs;
            ``(3) allocate equitably dues, fees, and other charges 
        among its members;
            ``(4) include standards of utility operation designed to 
        foster reliability of electric reliability systems; and
            ``(5) provide a procedure for discipline (including fines, 
        suspension, expulsion, or other appropriate sanctions of 
        members for violation of this section, rules and regulations 
        issued under this section, and rules of the council.
    ``(d) Oversight of Electric Reliability Councils.--
            ``(1) The Commission shall oversee the operations of an 
        electric reliability council.
            ``(2) The Commission shall establish procedures for an 
        electric reliability council to apply for registration, shall 
        provide public notice of the application, and shall afford 
        interested persons the opportunity to submit views on the 
        application. The Commission shall register an applicant if the 
        Commission determines that--
                    ``(A) the applicant is so organized and has the 
                capacity to carry out the purposes of this section and 
                to comply and enforce compliance of its members with 
                the provisions of this section, the rules and 
                regulations issued under this section, and the rules of 
                the applicant;
                    ``(B) the applicant's rules comply with subsection 
                (c) of this section; and
                    ``(C) the applicant's rules do not impose a burden 
                on effective competition that is not necessary or 
                appropriate to further the purposes of this section.
            ``(3) An electric reliability council shall file with the 
        Commission for approval any proposed rule or proposed rule 
        change, accompanied by an explanation of its basis and purpose. 
        The Commission shall establish procedures, in accordance with 
        part III of this Act, to consider a proposed rule or proposed 
        rule change. A proposed rule change takes effect upon 
        Commission approval, except as specified in paragraphs (4) and 
        (5).
            ``(4) A proposed rule or proposed rule change that an 
        electric reliability council designates as--
                    ``(A) a stated policy, practice, or interpretation 
                with respect to the meaning, administration, or 
                enforcement of an existing rule;
                    ``(B) establishment or changes in dues or other 
                council charges; or
                    ``(C) concerned solely with administration of the 
                council takes effect upon filing with the Commission.
            ``(5) An electric reliability council may put into effect 
        summarily a proposed rule or proposed rule change that is 
        necessary to protect an electric reliability system, subject to 
        subsequent Commission approval.
            ``(6) The Commission may amend the rules of an electric 
        reliability council if the Commission considers amendment 
        necessary or appropriate to ensure the fair administration of 
        the council, to conform the council rules to the requirements 
        of this section or rules and regulations issued under this 
        section, or to further the purposes of this section or promote 
        effective competition. The Commission shall establish 
        procedures in accordance with part III of this Act to implement 
        this paragraph.
            ``(7) If an electric reliability council imposes a final 
        disciplinary action on a council member, the council shall 
        notify the Commission of that action. The Commission, on its 
        own motion, or upon application by the member subject to the 
        action, after notice and opportunity for hearing in accordance 
        with part III of the Act, may affirm, set aside, or modify the 
        action.
            ``(8) The Commission, by order, may suspend or revoke the 
        registration of an electric reliability council or limit the 
        activities, functions, or operations of a council if it 
        determines that action is necessary or appropriate to protect 
        the electric reliability system. If the Commission responds or 
        revokes the registration of a council, the Commission shall 
        operate the council until the suspension expires, the 
        revocation is reversed, or another council is in place.
            ``(9) The Commission, by order may suspend or expel a 
        member from a council, or may remove from office an officer or 
        director of the council if the Commission, on the record after 
        notice and opportunity for hearing in accordance with part III 
        of this Act finds that action necessary or appropriate to 
        protect the electric reliability system.
            ``(10) A violation of this section is subject to section 
        316A, but not subject to section 316 of this Act.''.
    (b) Conforming Amendment.--Section 316A of the Federal Power Act is 
amended by striking ``or 214'' and inserting ``214, 215, or 217''. 
Section 316A of such Act is amended by striking ``or 214'' in each 
place it appears subsections (a) and (b) and inserting ``214, 215, or 
217''.
                                 <all>